In January, I posted on netbooks -- paperback book-sized computers that now go for under $300. To me, the netbook looked like a powerful growth trend that was boosting sales at makers by as much as 55%, even as the rest of the PC industry shrank 12%. 11 million netbooks were sold in 2008 and 22 million are expected to fly off the shelves in 2009.
Netbooks are popular because many people spend a lot of time dealing with online services and want a cheap, light device they can use on the go.
Netbooks represent a big shift in technology as well. While current netbooks can run complex software for office applications and games using products from Microsoft Corp. (NASDAQ: MSFT) and Intel (NASDAQ: INTC), the newest version netbooks to be introduced in June will run on the guts of cell phones, which pair ARM (low-power cell phone chips) and Linux (an open-source operating system that goes for $3 a copy).
So don't be surprised if the companies that make those guts end up profiting from the increased netbook demand. Qualcomm (NASDAQ: QCOM), Nvidia (NASDAQ: NVDA), Freescale Semiconductor and Samsung Electronics all make the cheap chips. And then there are the netbook makers like Taiwan's Acer and PC vendors like Dell (NASDAQ: DELL) and Hewlett Packard (NASDAQ: HPQ), which are trying to catch up. One way to play the netbook trend might be to bet on a drop in Microsoft stock while buying shares of Qualcomm and Acer.
The PC industry is long in the tooth and the netbook boom will sweep away those who can't adapt. Why shouldn't investors profit along the way?
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.
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Reader Comments (Page 1 of 1)
4-02-2009 @ 1:09PM
Haywood said...
Huh? Made from the guts of cell phones and running on Linux?
Where are you shopping? The only netbooks I've seen are running Intel (celeron or Atom), VIA (as in Cyrix) processors and running Windows XP (mostly Home edition). I've NEVER seen a netbook selling with Linux as the OS - not in a retail store. Can't find any online at BestBuy either.
4-02-2009 @ 1:22PM
WL said...
Well, this article misses the mark a bit. Most of the major netbook manufacturers have already shifted to windows (Microsoft) because of the terrible return rates on the Linux ones. They almost always run Atom processors (intel). The only true competitor that appears to be showing itself is nVidia with the Ion, but they do not have a product on the shelf yet. Also, since when does Linux sell for $3 a copy. I cannot find a distro that you have to buy. The market leader, Ubuntu, is readily available for a free download. Don't let the facts get in the way of the article though...
4-02-2009 @ 4:21PM
Oversight said...
Although one must agree that Netbooks are a big thing right now (and therefore a great potential money maker), this guy is so far off the mark as far as the basics go its... well, scary.
The fact that he would quote a per-unit price for Linux cements the fact that he doesn't understand anything about that OS, and the statement about running on "the guts of cell phones" is just silly. Which cell phone? My BB Bold and my friends' iPhones are certianly more powerful then my mom's Samsung A436, and Sony's X1 and Nokia's n97 are in a totally different league as well. Apples and oranges.
Just another good reason not to believe what you read from "experts" online, and don't bet your money on their afternoon blog fodder.